Economics Assignment #2 2020.docx - Isis Avila Economics Assignment#2 Mr Jose Puga Economics Assignment 10 Use the following diagram to calculate total

Economics Assignment #2 2020.docx - Isis Avila Economics...

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Isis Avila Economics Assignment #2 3/3/2020 Mr Jose Puga
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Economics Assignment 10. Use the following diagram to calculate total consumer surplus at a price of $8 and production of 6 million meals per day. For the same equilibrium, calculate total producer surplus. Assuming price remained at $8 but production was cut to 3 million meals per day, calculate producer surplus and consumer surplus. Calculate the deadweight loss from underproduction. A. Consumer Surplus Formula = ½(base x Height) Answer: Consumer Surplus= ½(6 x 6) = 18 B . Producer Surplus Formula #1= Base x Height = 3 x 8= 24 Formula #2= 1/2 (Base x Height)= ½(3 x 5) = 7.5 Answer : Producer Surplus = 24 + 7.5= 31.5 Consumer Surplus Answer : Formula = ½( 3 x 8)= 12 C. Deadweight loss Consumer Surplus #1 – Consumer Surplus #2= Deadweight Loss Answer : 18 – 12= 6
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4. A sporting goods store has estimated the demand curve for a popular brand of running shoes as a function of price. Use the diagram to answer the questions that follow.
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